After its decision to stop accepting bitcoin for some transactions last week, Microsoft has reversed the decision, stating that it had ensured lower amounts of bitcoin are usable. This is apparently due to some sort of agreement between Microsoft and BitPay. Though the nature of the agreement is unknown. The reason for the original decision was the high volatility and transaction fees on the bitcoin network. So one could infer that whatever the agreement is, it solves those issues somehow.
Microsoft’s decision good news for Steam?
In an earlier blog post, BitPay stated that Microsoft was using it to manage its bitcoin transactions. Bitpay is the same provider that Valve’s Steam used before it ceased its bitcoin transactions last year. Does this mean that Steam will be able to reach a similar agreement with BitPay and reinstate its own bitcoin-based transactions? Is the agreement not available to other BitPay customers? If it is the latter, what exactly is the agreement? Is it that Microsoft’s transactions are worth enough to BitPay that it is willing to lower its profit margin?
Fallout from the rapid-fire stance changes
The bitcoin community seems rather unsure of its opinion of Microsoft over its quick changes in stance towards bitcoin. With some users stating that this move was a power play and others thankful for the decision’s reversal.
Microsoft has temporarily removed the ability to directly buy products from its store with bitcoin. However, the ability to credit an account with bitcoin is still active (for some, though it could be a sign of the rollout of removing Bitcoin payment options). The decision is reportedly due to the extremely large fluctuations bitcoin has experienced recently and the ever-increasing transaction costs. It is unclear whether or not this is an indication that Microsoft intends to suspend all bitcoin transactions in the future. Notably, by accepting Bitcoin for deposits, they don’t have to deal with the volatility in the Bitcoin price. If users feel the fees are too high, they just won’t top up their accounts with BTC during that time. Back in 2016, a similar scare occurred where Microsoft temporarily removed Bitcoin as a payment option. They denied doing so after – no such denial has been forthcoming this time.
Microsoft is not the first company to suspend bitcoin-based purchases
Steam took similar actions in December last year by removing the ability to purchase games with bitcoin, stating it was due to “High fees and volatility” referencing a 25% drop in price over a few days, and fees jumping from $0.20 to $20 a transaction. Though it is unclear whether or not the high fee motivation included the large fee bitpay included on transactions.
There are a few solutions to this; Such as selecting a different currency to transact with, such as Bitcoin Cash or Ripple. As services such as shapeshift.io and changelly exist, this should not inconvenience those holding bitcoin or other altcoins, as the services allow for instant conversion from one coin to another (at a higher fee than some exchanges, unfortunately). Another possible solution is to continue to accept bitcoin no matter the fee and to convert it to fiat as quickly as possible to avoid too much network fluctuation. Though this does not protect customers from high transaction fees.